Generics companies face barriers to getting samples for drug development: GAO

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Ben Comer Senior Manager, Health Research Institute, PwC US November 22, 2019

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Generic drug manufacturers continue to face challenges gaining access to samples of branded products, also known as reference standard drugs, despite actions by the FDA and the Federal Trade Commission, a report from the Government Accountability Office (GAO) found. Reference drug samples are needed by generics manufacturers to conduct bioequivalence studies; the FDA requires bioequivalence data in order to approve a generic drug for consumer use. The GAO interviewed company officials at four generics manufacturers and five branded drug companies to identify problems in getting product samples.

Generics manufacturers have accused branded drug manufacturers, or reference companies, of using Risk Evaluation and Mitigation Strategies (REMS) to avoid giving samples to generics companies or to slow the process, according to the GAO. REMS programs are assigned by the FDA to products with serious safety concerns, to “ensure the benefits of the medication outweigh its risks,” according to the FDA.

REMS requirements can include medication guides for patients, communication plans for healthcare providers, and ETASU, or “elements to assure safe use.” ETASU can further require product monitoring activities among healthcare providers and pharmacists and participation in a shared REMS system used by multiple manufacturers, including a reference company and generics manufacturers. ETASU may also limit product distribution channels by requiring certification of providers or pharmacists that prescribe or provide a product with an ETASU.

Company officials at all four of the generics manufacturers interviewed by GAO said reference products with an ETASU designation that limits distribution channels “either delayed or discouraged” them from developing generic drugs. Officials at three of the four generics manufacturers said they also had experiences with reference companies limiting distribution of products that don’t have a REMS or ETASU requirement.

As of March 18, FDA has approved 74 active REMS programs covering 523 drugs, 10 of which are shared systems REMS programs, the GAO noted. Medicare and Medicaid spent a combined $11.8 billion for reference standard products with REMS programs in 2017, the report found.

HRI impact analysis

It is unlawful, under the Food, Drug and Cosmetic Act, for manufacturers to use REMS programs to “block or delay” approval of a generic drug application. But some generics manufacturers still struggle to obtain samples for bioequivalence testing in a timely manner, which can delay or even halt the launch of a generic drug, generics manufacturers told the GAO.

Tools such as FDA safety determination letters have not been very useful, generics manufacturers said, since they are not enforceable and don’t mandate sharing of samples, according to the GAO report. The FDA supplied only 12 safety determination letters between 2016 and 2018, according to the report.

The CREATES Act, versions of which have been introduced in both the House and the Senate, would allow generics manufacturers to bring civil lawsuits against reference companies that do not make samples available to them. The threat of lawsuits could loosen some brand manufacturers’ holds on their reference samples, and this could lead to some additional generic products coming to market.

Still, the impact of the legislation, should it become law, is likely to be very modest. The Congressional Budget Office scored the House and Senate versions of the CREATES Act, finding that both bills would reduce direct government spending by a total of $3.3 billion over 10 years. For perspective, according to CMS, total gross spending on prescription drugs in 2017 was $154.9 billion in Medicare Part D, $30.4 billion in Part B, and $67.6 billion in Medicaid – a total of almost $253 billion.

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Ben Comer

Senior Manager, Health Research Institute, PwC US

Crystal Yednak

Senior Manager, Health Research Institute, PwC US

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